Performance Excellence and other Terms – Definitions
Performance Excellence and Related Terms (Performance, Performance Projections, Goals, Integration) – Operational Definitions
Source: PQA / Baldrige
Performance refers to outputs and their outcomes obtained from processes, products, and customers that permit the organization to evaluate and compare its results relative to performance projections, standards, past results, goals and the results of other organizations. Performance can be expressed in non-financial and financial terms.
The PQA / Baldrige Criteria address four types of performance: (1) products, (2) customer-focused, (3) operational, and (4) financial and marketplace.
“Product performance” refers to performance relative to measures and indicators of product and service characteristics important to customers. Examples include product reliability, on-time delivery, customer-experienced defect levels, and service response time. For nonprofit organizations, “product performance” examples might include program and project performance in the areas of rapid response to emergencies, at-home services, or multilingual services.
“Customer-focused performance” refers to performance relative to measures and indicators of customers’ perceptions, reactions, and behaviors. Examples include customer retention, complaints, and customer survey results.
“Operational performance” refers to workforce, leadership, organizational, and ethical performance relative to effectiveness, efficiency, and accountability measures and indicators. Examples include cycle time, productivity, waste reduction, workforce turnover, workforce cross-training rates, regulatory compliance, fiscal accountability, strategy accomplishment, and community involvement. Operational performance might be measured at the work unit level, key work process level, and organizational level.
“Financial and marketplace performance” refers to performance relative to measures of cost, revenue, and market position, including asset utilization, asset growth, and market share. Examples include returns on investments, value added per employee, debt-to-equity ratio, returns on assets, operating margins, performance to budget, the amount in reserve funds, cash-to-cash cycle time, other profitability and liquidity measures, and market gains.
Performance Excellence refers to an integrated approach to organizational performance management that results in (1) delivery of ever-improving value to customers and stakeholders, contributing to organizational sustainability; (2) improvement of overall organizational effectiveness and capabilities; and (3) organizational and personal learning.
Performance Projections refers to estimates of future performance. Projections should be based on an understanding of past performance, rates of improvement, assumptions about future internal changes and innovations, as well as assumptions about changes in the external environment that result in internal changes. Thus, performance projections can serve as a key tool in both management of operations and strategy development and implementation.
Performance projections are a statement of expected future performance.
Goals are a statement of desired future performance. Performance projections for competitors and similar organizations may indicate challenges facing your organization and areas where breakthrough performance or innovation is needed. Where breakthrough performance or innovation is intended, performance projections and goals may overlap.
Goals refers to a future condition or performance level that one intends or desires to attain. Goals can be both short- and longer-term. Goals are ends that guide actions. Quantitative goals, frequently referred to as “targets,” include a numerical point or range. Targets might be projections based on comparative or competitive data. The term “stretch goals” refers to desired major, discontinuous (non-incremental) or “breakthrough” improvements, usually in areas most critical to your organization’s future success.
Goals can serve many purposes, including
· clarifying strategic objectives and action plans to indicate how you will measure success;
· fostering teamwork by focusing on a common end;
· encouraging “out-of-the-box” thinking(innovation) to achieve a stretch goal;
· providing a basis for measuring and accelerating progress.
Integration refers to the harmonization of plans, processes, information, resource decisions, actions, results, and analyses to support key organi-zation-wide goals. Effective integration goes beyond alignment and is achieved when the individual components of a performance management system operate as a fully interconnected unit.